This chapter discusses the historical context of water use, rights, and development, much of which has contributed to the current water shortage in many arid regions of the world. In addition, it attributes many perceived water crises to poor water management instead of an insufficient water supply. Poor water management is discussed in several contexts, including the ecological implications of past water development, social and public health ramifications, and a general underestimation of all costs associated with water development. Recommendations are provided to improve the management of water resources in the future. These recommendations include recognizing that uncertainty about costs and benefits of water management choices must be taken into account by decision-makers, and that incorporating community management of water resources can lead to improved water management. Other recommendations include improving water pricing and allocation systems, such as through a switch from queuing systems to tradable permits; as well as using water pricing mechanisms that incorporate the negative externalities of water quality deterioration. Finally, the chapter provides description of how to improve the cost-effectiveness of policies to improve water quality and quantity through better targeting.